PILLA TALKS TAXES

Dan’s newsletter Pilla Talks Taxes is published ten times per year with articles designed to help you stay current on new laws, strategies and defenses. Dan will show you how to protect and defend your clients' rights, new ways to cut taxes and how to avoid problems with the IRS. If it is important for you to know, you will find it in this newsletter! You'll be among the first to know what's going to happen, even before it happens, making you invaluable to your clients.

Pilla Talks Taxes is a must-have for any tax professional. Subscriptions are available direct from WINNING Publications, Inc. for $99/year, however TFI Members receive a free subscription as part of their membership benefits. In addition, our members are able to access a searchable archive of past Pilla Talks Taxes articles. Below is a example of the no-nonsense information you will find in Dan's newsletters.

Featured Article

IRS TO SHUT DOWN OFFSHORE VOLUNTARY DISCLOSURE PROGRAM

This is Your Last, Last Chance to Come Forward

The IRS has operated its Offshore Voluntary Disclosure Program (OVDP) in some shape or manner since 2009. It has gone through a few iterations, the most recent being the 2014 version. I have discussed this program in various newsletter issues over the years and we dedicated a session to the topic in the 2013 Defense Conference. In a nutshell, the program allows citizens with undisclosed offshore financial assets to step forward, file the required foreign financial account reports with the Treasury, pay delinquent taxes and tax penalties, and obtain a substantial reduction of the penalty for failure to file the so-called FBAR form with the Treasury.

On March 13, 2018, the IRS announced that it will ramp down the program and close it for good on September 28, 2018. According to acting IRS Commissioner David Kautter, Taxpayers have had several years to come into compliance with U.S. tax laws under this program. All along, we have been clear that we would close the program at the appropriate time, and we have reached that point. Those who still wish to come forward have time to do so.” See: IRS News Release: IR-2018-52.

In the past, the IRS announced closing dates for all prior programs, but found a reason to keep them open to allow more people to take advantage. This time, however, it appears that this is your last, last change to file if you haven’t already done so.

Since the OVDP’s initial launch in 2009, more than 56,000 taxpayers used one of the programs to report previously unreported offshore assets and income. According to the above news release, those taxpayers paid a total of $11.1 billion in back taxes, interest and penalties. The number of disclosures under the OVDP peaked in 2011, when about 18,000 people came forward. The number steadily declined through the years, falling to only 600 disclosures in 2017. This is likely what’s driving the IRS’s decision to close the program. Moreover, given all the publicity pointed at offshore compliance requirements in the past ten years, more people are complying on the front end to begin with.

Ending the voluntary disclosure program does not mean the IRS will take its eye off the ball when it comes to foreign income and assets. The IRS says it will continue to use enforcement tools such as whistleblower leads, tax audits and criminal prosecutions to enforce the law. Since 2009, IRS Criminal Investigation indicted 1,545 taxpayers on criminal violations related to international activities, of which 671 taxpayers were indicted on international criminal tax violations.

All that said, it appears that the IRS’s other offshore program, known as the Streamlined Filing Compliance Procedures, will continue in effect, at least for now, for eligible taxpayers. This program is for those who might not have been aware of their filing obligations. About 65,000 additional people have used this program to come into compliance. As with OVDP, the IRS has said it may end the program at some point in the future.

The implementation of the Foreign Account Tax Compliance Act (FATCA) in 2010 is what started the frantic move to come into compliance with tax and information reporting obligations regarding foreign financial assets. But even the IRS acknowledges that peoples’ circumstances vary widely. As a result, the news release states that the IRS will continue offering the options for addressing previous failures to comply with respect to offshore assets. These options include:

IRS-Criminal Investigation Voluntary Disclosure Program,

Streamlined Filing Compliance Procedures,

Delinquent FBAR submission procedures, and

Delinquent international information return submission procedures.

The IRS discusses these various options on its web site. If you have undisclosed foreign income or assets, you must seriously consider taking advantage of any applicable program.